Bed Bath & Beyond Swings Deal for Cost Plus

UNION, N.J., and OAKLAND, Calif.-Bed Bath & Beyond has reached an agreement to acquire Cost Plus, the specialty retailer of casual home furnishings and entertainment products.

The deal is an all-cash transaction for $22 a share for all of Cost Plus' outstanding shares, which totaled 23,357,000 as of the end of the company's fiscal year on Jan. 28. This would put the transaction's total value at about $514 million. When the deal is finalized, which is expected to take place during Bed Bath's fiscal second quarter, it will add the Cost Plus portfolio of 259 stores in 30 states to Bed Bath's store base.

In an interview with HFN, Gene Castagna, Bed Bath & Beyond's chief financial officer, said there are no plans to change Cost Plus' nameplates once the transaction is closed. Cost Plus operates stores under the World Market, Cost Plus World Market, Cost Plus Imports and World Market Stores nameplates. Reiterating what was said in a joint statement from the two companies, Castagna added that Cost Plus' management and Oakland headquarters would also remain in place.

In the statement, Steven Temares, Bed Bath's CEO, said the combination of "the highly talented Cost Plus organization with our own dedicated associates" will enhance service to the two retailers' customer bases.

Barry Feld, Cost Plus' CEO, cited the "successful merchandising and product collaborations over the past two years" between Cost Plus and Bed Bath. Elaborating on this, Castagna said Bed Bath has opened Cost Plus food departments over the past two years in stores in San Diego, Elmsford, N.Y., Totowa, N.J., and the most recently opened one in East Hanover, N.J.

For the fiscal year ending on Feb. 25, Bed Bath posted net income of $351 million, up 24 percent from the prior year, on net sales of $989.5 million. For the fiscal year ending on Jan. 28, Cost Plus posted net income of $16.5 million, up from $2.9 million, on net sales of $963.8 million.